FROM: Interim President Joseph S. Wood
Newsletter #13: A Mid-year Report
January 16, 2008
Dear Colleagues,
Welcome back to the Spring Semester!
On Monday I updated you on the progress report to the Board of Trustees (http://www.usm.maine.edu/mcr/update/0708/1.14.html). Today, I want to give you a more comprehensive mid-year report. We are making substantial progress toward balancing our budget and replenishing reserves but we have a long way to go.
As you read through what follows, please let me know which topics need further clarification.
There are three fundamental issues underlying USM’s budget challenges that bear repeating.
* This will not get any easier. Yes, we told Trustees on Monday that we have reduced our deficit by $2,000,000, our target amount for this year. However, we also told Trustees that our mid-year financial reports dictate that we cut another $900,000 before June 30, 2008 to cover higher energy costs and lower revenues due to a 2 percent drop in spring and early summer enrollments. We also will be increasing the $2 million cut scheduled for next year to offset the one-time cuts –as opposed to permanent base budget cuts- we took this year. Consequently, you will see a renewed focus on spending controls during the rest of this academic year. I want it clear: effective control over departmental spending, wherever and whenever possible, will be a criterion of performance evaluations.
* Revenue enhancement is critically important if we are to continue to make investments in those areas, which support the quality of this institution. Our first investment priority must be to keep the students we have, and to recruit students who want our strongest programs, whether as first-time students or transfer students. As the UMS institution most dependent upon tuition, as opposed to State appropriation, enrollment changes have the greatest relative effect on our budget. Effective marketing, another investment priority, goes hand-in-hand with effective student recruitment and retention. These and other efforts, including gen ed reform, enhance future net revenues and reduce future expenditures.
* There will be no quick fixes. Historically we have failed to plan budgets for multiple years, in part because we never knew what to expect based on changes in appropriation, tuition, collective bargaining, or enrollment totals. We now have had to begin to make longer-term assumptions on all of these budget variables and map out a multi-year strategy for eliminating our deficit and restoring reserves. Count on three years to reduce the deficit—through FY2010—and several more beyond that to restore reserves— by FY2014.
Now let me bring you up to date on a number of efforts to align expenditures with resources:
Budget Planning. This month, we are conducting a formal mid-year budget review. Vice presidents, deans, and others with major expenditure budgets will confer with Dick Campbell, Mark Lapping, and me about spending rates. We will also begin to develop more realistic budgets for FY 2009 that align expenditures with resources.
Targets. All units have targets for base budget reduction, but for the first time we are coordinating reductions among units and projecting the impact of those reductions over several years. This approach allows us to think more strategically about our budget work and the effects of that work on institutional goals and mission.
Reorganization. Reorganization is the only way to find long-term, sustainable savings. We have not been public with details out of respect for individuals who will be affected. That will change shortly as plans are finalized. I’ve reported on several occasions that we’ll be reorganizing some public service and non-credit programs, such as Lifeline. We also are implementing reorganizations in the Division of Finance and Administration; Division of Student and University Life; Multicultural Student Programming; and in alumni and development functions across several units. Additional details on these and changes in other administrative units will be announced this winter.
Academic Program Reorganization, Reduction, or Elimination. I previously reported to you that I asked for criteria by which to review academic degree programs. In order to move this along, I will share soon a proposal to suspend admissions to a set of programs. These programs have few annual graduates and/or have instructional capacity issues (no full-time faculty or anticipated loss of faculty).
Yes, we have made commitments to programs, including appointment of faculty. But if programs are not graduating students, why do we have them and why should we sustain those commitments? At the same time -- and this is important -- suspension of admissions gives programs a chance to reorganize in a responsive fashion that addresses curricular holes or new opportunities.
My intent is to review these programs for their contribution to USM’s mission before considering moving formally to suspend or eliminate. Board of Trustees policies govern how one suspends or eliminates a program and what happens to faculty appointments. This, of course, requires consultation at multiple levels, so this action will have little short-term effect. Nevertheless, it could give us the capability to reallocate instructional capacity in support of institutional growth and development. Several programs are in discussions already, and I intend to give those programs until the end of this academic year to develop a plan for sustainability. At the same time, we must exercise control on new program implementation, unless we can project immediate net revenue enhancements. Expect NO net increase in the number of programs we offer.
Position Elimination. This remains our immediate means of balancing the budget. We have established a minimum goal of a total of 90 position eliminations, through attrition and layoffs, by fiscal year 2010. That includes the 30 positions eliminated last year. Given the State revenue shortfall and the lag in capturing savings due to required notice periods, payout periods, and severance requirements, this number may increase. We are exempting fewer positions than in the past, and we are appointing only a small handful of faculty members for 2008-2009, based on academic need.
I know that we’re all increasingly frustrated over this situation and what many of us see as a lack of progress toward a solution. As I said earlier, this is not easy work, nor are there any quick fixes. We have accomplished much this year, and we have much more to do over the next several years. In the end, we will be a stronger university.
Sincerely,
Joe
For more information, please click on http://www.usm.maine.edu/mcr/update This site includes the breakfast speech; the latest digest of ideas e-mailed to movingforward@usm.maine.edu; our work plan; and notes from the recent series of town meetings.
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